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Just Announced For 2017: A Middle Class Tax Increase

Monday, October 31, 2016 12:11
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(Before It's News)

If you are a middle-class earner there’s a good chance you might be scheduled to have your taxes increase – and you might not even be aware of it. Effective January 1, 2017, the amount of your income that is subject to Social Security taxes increases from from $118,500 to $127,200. This means that for an American worker who was fortunate enough to earn in the higher end of the middle class income range, their taxes could go up by as much as $539.40 per year. And a married couple with each partner earning an income over that threshold could see a tax hike of $1,078.80. The increase to the amount of income that is subject to the social security payroll tax is up almost 100% in the past twenty years. There is no telling what the limit will be in the future especially given the financial condition of social security.

While the impact of this tax is perhaps the biggest issue, one question that also comes to mind is why a tax increase like this is not more widely discussed? It seems the government wants more transparency on airline fares, mortgage pricing, banking services and in so many other industries but when it comes to taxation, I am not sure how many Americans know what is happening. Just consider what happens at the gas pump. I would imagine that, for example, drivers in Pennsylvania might be surprised to know they are charged 18.4 cents per gallon in federal gas taxes and over 50 cents per gallon in state taxes.

If you are a middle-class earner there’s a good chance you might be scheduled to have your taxes increase – and you might not even be aware of it. Effective January 1, 2017, the amount of your income that is subject to Social Security taxes increases from from $118,500 to $127,200. This means that for an American worker who was fortunate enough to earn in the higher end of the middle class income range, their taxes could go up by as much as $539.40 per year. And a married couple with each partner earning an income over that threshold could see a tax hike of $1,078.80. The increase to the amount of income that is subject to the social security payroll tax is up almost 100% in the past twenty years. There is no telling what the limit will be in the future especially given the financial condition of social security.

While the impact of this tax is perhaps the biggest issue, one question that also comes to mind is why a tax increase like this is not more widely discussed? It seems the government wants more transparency on airline fares, mortgage pricing, banking services and in so many other industries but when it comes to taxation, I am not sure how many Americans know what is happening. Just consider what happens at the gas pump. I would imagine that, for example, drivers in Pennsylvania might be surprised to know they are charged 18.4 cents per gallon in federal gas taxes and over 50 cents per gallon in state taxes.

In an attempt to close the future shortfalls in the Social Security Trust Fund and to make this tax fairer, the drumbeat in Washington has increasingly been to eliminate the limit of income subject to payroll tax. By doing so they feel they are addressing an aspect of the tax that favors the wealthy – or at least favoring those with higher earnings. And in an era where fairness is the watchword, and with social security not being in great financial shape, the possibility of eliminating the cap on earnings subject to payroll taxes is increasing. If the taxable wage base ceiling is eliminated, it would be…

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The post Just Announced For 2017: A Middle Class Tax Increase appeared first on Liberty Investor™.

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